When Does the FDA Consider Compounding Pharmacies “Manufacturers” or “Outsourcing Facilities”?

When Does the FDA Consider Compounding Pharmacies “Manufacturers” or “Outsourcing Facilities”?

i-cadeceus compounding pharmaciesWe all face questions every day regarding the safety and efficacy of what we do, and work constantly to educate patients, health care professionals and the general public about the many benefits of compounded medication. It’s important for operators of responsible compounding pharmacies to remember, however, that from the fallout of the 2012 compounding incident at a Framingham, Mass., facility also came new ways for compounding pharmacies to work within the health care industry’s structure, and regulation that helps make sure that no future incidents can blacken the eye of the entire compounding industry and obscure all the good we do again.1

The Food and Drug Administration passed the Compounding Quality Act in November 2013 largely in bringing compounders like the one responsible for Framingham, that manufacture in large volumes and sell directly to health care providers, into a regulatory framework that previously didn’t include them. The regulation was designed to bring some structure to the compounding pharmaceutical world and set up distinctions between the different types of compounders. For compounding pharmacy operators, the main determining factor for which level of the regulatory framework applies is an organization’s classification: traditional compounding pharmacy, manufacturer and now, “outsourcing facility.”2

How Are Compounding Pharmacies, Outsourcing Facilities and Manufacturers Defined?

Compounding pharmacy or manufacturer? This has been a longstanding question and point of contention between different factions in the pharmaceutical world and the FDA. The agency first involved itself in trying to make this distinction going back to the 1990s, and again in 2002 when it issued a Compliance Policy Guide aimed at expanding oversight of what it viewed as essentially manufacturing under the auspices of compounding.3

That’s not to say that the Compounding Quality Act has settled the discussion once and for all—it hasn’t. The act not only set up a third classification in “outsourcing facilities,” it also left that classification as a voluntary designation after spirited debate proved that it would be difficult to settle on a concrete definition. What the act did clarify, however, is the delineation between a manufacturer and a traditional compounding pharmacy.

In the broadest terms, a manufacturer is a compounding entity that does not meet the definition to qualify as a traditional compounding pharmacy under section 503A of the Compounding Quality Act, itself a reiteration of the much older Food and Drug Modernization Act of 1997.

More specifically, a drug compounding operation is considered a manufacturer and not a pharmacy if the entity:

  • does not compound for patient-specific purposes,
  • creates non patient-specific compounds for distribution or in bulk, or
  • sends more than 5 percent of orders across state lines, whether they are for specific prescriptions or not.4

Many medium to large compounders will be considered manufacturers under this definition.

The definition of a traditional compounding pharmacy remains mostly unchanged under section 503A. Pharmacists are considered covered under this provision if they:

  • compound medication based on specific patient prescriptions,
  • abide by quality guidelines such as only using compounds on a safe-to-compound list (which are not “demonstrably difficult” to compound),
  • use proper sterile compounding technique based on the United States Pharmacopeia guidelines,
  • do not compound commercially available medications,
  • and do not send more than 5 percent of prescription drug orders across state borders.

An outsourcing facility is generally a compounder who does not qualify under section 503A for exemptions given to traditional compounding pharmacies, but who does not want to be classified as a manufacturer and be subject to stricter FDA regulations surrounding testing and timeline-to-market. Choosing to be classified as an outsourcing facility, however, carries its own pros and cons.5

Why a Compounding Manufacturer Might Elect to Be Classified as an Outsourcing Facility

A manufacturer might have several reasons to want to be classified as an outsourcing facility. The category was originally created to compel manufacturers to be held to higher standards and subjected to increased testing in exchange for some loosening of red tape restrictions around specific product testing and ability to get drugs to market.

A vigorous debate changed the original Senate version making the classification mandatory to a voluntary one, with the argument that a mandatory classification could bankrupt mid-sized entities and prove unworkable, whereas market forces would still encourage compounders to register under a voluntary system. If an organization registers as an outsourcing facility, they must follow all of the requirements of pharmacies under 503A as well as the Current Good Manufacturing Practices that manufacturers follow, including only compounding sterile preparations under supervision of a licensed pharmacist and reporting all adverse drug reactions to the FDA.

In exchange, companies can claim some benefits and exemptions that might make the registration quite worthwhile, depending on a compounder’s motivations to register. These include:

  • bypassing new drug-approval requirements which manufacturers are subject to, and
  • the ability to compound and sell unlimited quantities of any drug listed on the FDA’s drug shortage list without any patient-specific prescription, anywhere in the United States.

The FDA has also stated that it encourages consumers to use registered outsourcing facilities. Market forces will likely also reward those who choose to register and conform to higher standards in favor of more flexibility to bring products to market. This should benefit a supplier on both ends, ultimately, following the initial investment to become CGMP-compliant, implement sterile compounding practices and pay the $15,000 registration fee.

It’s also important to note that entities should only register as an outsourcing facility if they intend for all activities to be subject to regulation under 503B, which governs conditions for sterile compounding. An FDA guidance specified that facilities that only compound non-sterile drugs, animal drugs or repackage biologics should not register as outsourcing facilities, since none of their activities apply.6

Negotiating regulation in an industry as complex and crucial as ours is always a difficult prospect. On the one hand, restrictions and regulation can make things more difficult for pharmacies who must change systems or bear expense in order to comply. The other consideration, however, is that unsafe compounders threaten to poison our entire market, not to mention innocent members of the public whom we have a responsibility to keep safe.

Compounding pharmacists are in the healing and treatment business. We know our work is critical to the future of healthcare and helps many who may otherwise not be well-served by the rest of the pharmaceutical industry. We should always make sure our rights and businesses are respected during the process, but we also have a responsibility to make sure we all use the highest possible standards and promote safety at all times.

Pharmaceutica North America is a premier provider of high-quality bulk active pharmaceutical ingredients, unit-dose APIs and custom compounding kits, including kits and APIs for treating chronic and acute pain. Contact us to learn more about how our products can help you provide the best possible patient care.

Show 6 footnotes

  1. “Regulating Compounding Pharmacies,” May 1, 2014, http://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=114
  2. “FDA Implementation of the Compounding Quality Act,” Dec. 30, 2015, http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/PharmacyCompounding/ucm375804.htm
  3. “Pharmaceutical Compounding Versus Manufacturing: Renewed Interest in an Old Question,” Dec. 11, 2012, http://www.ajpb.com/journals/ajpb/2012/ajpb_novdec2012/pharmaceutical-compounding-versus-manufacturing-renewed-interest-in-an-old-question
  4. “Outsourcing Facilities,” Oct. 6, 2015, http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/PharmacyCompounding/ucm393571.htm
  5. “Pharmacy Compounding of Human Drug Products Under Section 503A of the Federal Food, Drug and Cosmetic Act: Guidance,” October 2015, http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM469119.pdf
  6. “Guidance For Entities Considering Whether to Register as Outsourcing Facilities Under Section 503B of the Federal Food, Drug, and Cosmetic Act,” August 2015, http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM434171.pdf
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